Markets sold off sharply today and it was led by tech as the Nasdaq fell as much as 2.4% at the lows of day but managed to recover some and finish the day down 1.43%. The S&P closed down 0.84% while small caps were leading all day and the Russell 2000 managed to close higher by 0.31%. Homebuilders were a bright spot which helped boost small caps after news of the builders working on "Trump Homes" - a plan by homebuilders to build up to 1 million homes in efforts to address the U.S. housing affordability crisis. XHB (homebuilders ETF) gained 2.25% on the news. During today's selloff in markets, the VIX jumped nearly 25% but gave back a lot of the gains with the end of day market recover and it closed up about 10%.
The Nasdaq opened higher this morning above its uptrend supports, however it got rejected right at resistance from the new sideways range just under 23,700 that I mentioned in yesterday's update. It put in a high of 23,691.60 before the sharp selloff. It also broke through the lower end of the range's support and got all the way down near 23,000. This was a major level as it was the last daily support as well as weekly support (see the weekend update).
With the close below its prior uptrends, it now starts a new sideways range on the daily. There are now three trends to look at. The first will be yesterdays sideways range that it closed below today (yellow). This will now act as resistance on a bounce at about 23,365 as long as it does not gap back over it tomorrow. If it does, then that level becomes support. The next resistance level to watch will again be just below 23,700 since it did not break through it today. That level will be resistance from both yesterday's sideways range (yellow) and today's new sideways range (white) which have nearly identical resistance levels. Support levels to watch on the downside will be at about 23,040 from its prior uptrend (purple) which it bounced off of today. And then its new sideways range (white) that it started today will also be support just below that at about 23,030.
The S&P broke below its primary uptrend support from yesterday, but it did manage to close back over it. It wasn't a strong finish, but it does put in a failed breakdown on the daily. However, since it made a lower low today, it now starts a new slight downtrend. The first level to watch tomorrow will be at 6,917-6,918 which is where it closed today. This will be the retest of today's failed breakdown (yellow). Whether it opens above it or below it is essentially a toss up at this point since it closed right at it. If it does open above it, then it will be support and vice versa if it opens below it. The next daily support will be at about 6,860 from the new slight downtrend it started today (white). This is a big level as it is also monthly support which did hold today with the S&P putting in a low of 6,862. Resistance on a bounce will again be at the 6,990 area which has held for several days now from its prior sideways range (purple). It will now also be resistance from its new downtrend (white).
The Russell 2000 which closed above its downtrends yesterday and started a new uptrend was the best performer today. It broke through both ends of that uptrend today, just barely through its support, but now it starts a couple of new ranges going into tomorrow. It did make a higher high and higher low today so both of these new ranges will be uptrends. For tomorrow there will be several levels to watch.
First let's look at resistance levels. There will be resistance at 2,663 from yesterday's uptrend (purple). Then from the two new uptrends it starts today there will be resistance at 2,669 (yellow) and 2,679 (white). Supports on the other hand will be at 2,618 (white), 2,612 (purple), and 2,608 (yellow).
